Shanta Gold Ltd. unit Singida Resources PLC entered into a nonbinding term sheet with an East African conglomerate for an unsecured loan facility of US$10 million.

The facility is conditional on the company raising at least US$15 million in its planned IPO on the Dar es Salaam Stock Exchange in Tanzania.

The company will make repayments over three years from cash flows generated by the Singida gold project in Tanzania. The loan bears an annual interest rate of 10%.

Shanta Gold said Aug. 7 that it expects to retain at least 51% ownership of Singida following the IPO and will operate the project, which recently received an environmental impact assessment certificate.

In late March, Singida Resources announced a targeted US$20 million minimum equity offering via an IPO on the Dar es Salaam Stock Exchange.

The IPO proceeds will finance the initial capital required to bring Singida into production and exploration focused on resource expansion.